After a year under its new CEO, Murilo Ferreira, Vale (NYSE: VALE) is focusing more on profitability than on growth.

The Brazil-based diversified metals and mining company is pursuing this strategy in response to global uncertainty, particularly the slowdown in China. Governments around the world (e.g., Australia and Peru) have been raising royalties and mining taxes. In Vale's case, there's also the added burden of litigation with the US government over USD15 billion in overdue income taxes.

Until a year ago, the company was mainly investing in growth projects and merger and acquisition transactions, to take full advantage of the fast growth in commodity demand. However, it's now clear that the new management team is emphasizing profitability and disciplined capital allocation. This strategy will benefit the stock over the long term.

The company was been investing heavily in greenfield projects that are expected to produce solid returns. Its iron ore project in Carajás Serra Sul in Brazil and its Moatize coal project in Mozambique have been receiving the bulk of these investments.

The company has also been looking into divesting some of its non-core assets. Among those are coal assets in Australia, oil exploration assets in Brazil, and the company's stake in Norsk Hydro. Vale's potential sale of a stake in its general cargo logistics business also is in the cards. Vale is expected to net about USD9 billion from these transactions.

The company has been gradually adopting a more shareholder friendly approach. Last year, Vale returned around USD12 billion to shareholders in the form of dividends and buy-back programs. For 2012, the company has announced a minimum dividend payment of USD6 billion (an all-time high), which represents a high dividend yield of 6 percent at current prices.

Given the company's strong cash flows and stronger management team, investors should expect the company to start paying a dividend yield of around 5 percent, on a sustainable basis.